Tough questions help test and sharpen any vision for innovation.
Marty Weybret, publisher of the Lodi (Calif.) News-Sentinel and LodiNews.com, asked some tough questions on Chuck Peters’ C3 blog about the Complete Community Connection concept Chuck and I have been promoting. “The Complete Community Connection vision that you and Steve Buttry have enunciated is intriguing,” Weybret started. “You may detect a certain hesitancy in neutral words such as ‘vision’ and ‘intriguing.’ Frankly I have studied C3 with a fair patience and yet I don’t feel like I have my head around it. May I ask you a few questions — some carry the baggage of skepticism, for which I apologize. Some are posed with wide-eyed curiosity.”
First, I’ll embrace the skepticism and the curiosity. Though I will say that I regard “vision” and “intriguing” as positive words and I am pleased that this publisher has spent this much time and patience studying the vision. I don’t always have my head around it either and I wrote it. Changing deeply ingrained ways of thinking takes patience as well as persistence.
I will reiterate here that the heart of C3 is changing the relationship a newspaper company has with its community. The newspaper is a product, giving consumers a package of helpful content: news, calendars, sports, information, amusements and advertising. This product also sells space to businesses wanting to reach the large audience that buys the product. Keep in mind that this product continues to have a huge audience and an important place in virtually any community.
Look beyond the declining circulation figures and ponder how many products or services in your community have the same reach as the local newspaper. Some monopoly utilities such as power and water will be used by more people on any given day than the newspaper. A few ubiquitous products such as gasoline or cell phones are used more widely, but the local companies that provide those products and related services generally are quite plentiful so that no single phone service or gas station has the reach of the newspaper. This is part of what brought on the complacency that afflicted the newspaper industry as the digital age presented new opportunities.
Despite that continuing strong reach (made even stronger by the reach of the newspaper’s web site), our business model has been rocked. We’re not as important to Generation X and the Millennials as we are to Baby Boomers and seniors. And with Gen X moving into middle age, that means more and more spending decisions are being made by people who never see newspaper ads or who don’t rely as heavily on newspapers for their information about the community and marketplace. At the same time, the low cost of Internet advertising has undercut the rates of newspaper and broadcast advertising. So we need a new relationship.
C3 envisions new relationships with both consumers and businesses. As I explained in the introduction to the C3 blueprint:
For consumers, we will be their essential connection to community life — news, information, commerce, social life. Like many Internet users turn first to Google, whatever their need, we want Eastern Iowans to turn first to Gazette Communications, whatever their need. For businesses, we will be their essential connection to customers, often making the sale and collecting the money.
When I was discussing C3 this week at a meeting of Swift Communications, a Millennial made an excellent point in a tough question that I didn’t answer as well as I should have. He said his generation is not as likely to turn to a single source for multiple needs, but to use specific products or services that meet specific needs. He’s absolutely right. The newspaper is kind of a Swiss Army knife of information, a single tool that performs multiple functions. And Millennials (and lots of older consumers, too) are more likely to want a customized chef’s knife, a cordless power screwdriver and a can opener that crimps without leaving sharp edges than one tool that does all those jobs fairly well.
But the young man’s question ignores the most successful business of the digital age (and the one I cited in my analogy above): Google. Google does offer its one-size-fits-all simple search window that we use again and again. But it offers a dizzying array of other tools that do more specialized jobs: email, sharing documents, targeting ads, language translation, maps, etc. This is the approach we need to take: general and specialized tools.
In his insightful book What Would Google Do? Jeff Jarvis encourages businesses to identify what business we are really in. In the case of the newspaper business, our quick answer would be that we are in the newspaper business or the news business. Some, noting that Jarvis focuses the question by asking how we make our money, might say we are in the advertising business. I say we are in the connection business. We connect people with the news, information, answers, context and meaning that they need. And we connect businesses with customers and consumers with solutions to their problems. So my answers to all of Weybret’s questions boil down to understanding these core jobs and our new relationships and what they mean. So let’s address the specific questions:
Mr. Buttry makes an allusion to creating a business in which a Gazette sub-enterprise either sells goods and services on consignment for your customers or actually takes possession of merchandise which it would mark up and resell. In exchange, the customers would receive a promotional/advertising benefit. Have you actually launched such an enterprise? To what extent would you judge it to be a successful business or a successful launch with strong potential?
Unfortuntately, no, we haven’t launched such an enterprise yet, though I hope to be working on that shortly. I should add, though, that I don’t necessarily see the direct-sales aspect of C3 as a sub-enterprise but as a major change in our whole enterprise. This gets back to the relationship question. When all we do for businesses is sell advertising, we are an expense line in their budgets, a vendor who’s subject to cutbacks or losing business entirely when times get tough and businesses start cutting those expense lines. But if we start selling products and services directly for a business or enabling transactions in a measurable way, we become a revenue line and a business partner. And the business partner facing tough times will want to do more business with partners who bring in revenue. This is the heart of the C3 approach to revenue.
I also don’t necessarily see us taking possession of merchandise for markup or resale. (Though I like the innovative approach of the Quality Consignments operation launched by the Ogden Standard-Examiner and described in the Newspaper Next 2.0 report, so I don’t rule out consignment as one of the many tools we would use to serve customers.) I see us as bringing buyer and seller together and handling the transaction. But the product or service would generally go straight from buyer to seller (clearly we would need a way to interface with sellers’ inventory systems or to allow sellers to update merchandise they are offering). Our cut wouldn’t really be a markup that we add to the cost, but a cost of doing business that the seller includes in setting the price (or in setting a minimum price in an auction). Sellers are already used to paying such a cost for enabling transactions, every time they accept a customer’s debit or credit card.
I should stress here that the newspaper company doesn’t need to develop all the solutions envisioned in the transformation to C3. Sometimes we may need to develop a solution (while that may be expensive, it also offers the opportunity to sell that solution to others). Other times we will use existing services (PayPal, for instance, might be an option in handling transactions). We might need to find established vendors or startups who can develop solutions for us.
On to Weybret’s next question:
I would like to know if I have overlooked any business models/income streams in C3? Besides the novel “e-commerce” idea above, you have talked some and I see on your Web sites traditional “banners and buttons,” some of which are enhanced by links, audio, video other digital capabilities. I have seen your iGuide which uses these capabilities in a business directory/yellow pages format. I have not seen, but presume you’ve contemplated, serving up ads targeted to readers whose consumer propensities are divined from their content reading and searches. I also presume you’ve thought about offering such services as building Web sites and e-commerce sites. Oh yes … there’s also paid content … that deep well of discord in our community. Perhaps you’ve thought about non-profit business models (in any war, retreat is always an option). Beyond that, what have I missed? Although many of these ideas would stretch or exhaust my small enterprise, I want to know if I missed some practical new service that might gather a significant number of paying customers.
In a second comment, Weybret added this P.S. to this question: I also presume you put ads on push e-mail, Twitter and text messaging to cell phones and maybe even RSS feeds.
First, we’ll dispense with the paid-content notion. No, we don’t see that as a significant solution. Perhaps in some high-value niches that we haven’t developed yet, it would have potential. But people who see paid-content as protecting the print edition or bringing in significant revenue are building a business model on wishful thinking. I have written extensively about this before and won’t elaborate here.
I think non-profit models will be part of the future of journalism, particularly supporting areas such as investigative journalism. I applaud colleagues working on non-profit projects and wish them well. But I agree with my former boss at the American Press Institute, Drew Davis, who frequently says the best guarantee of a free press is a profitable press. I think developing a new business model for a profitable community connection organization is the path for the future.
On that question, I think that developing transaction-based services for businesses can be a significant revenue service in lots of niches and broad verticals. But lead generation – helping businesses identify customers with very specific interests – also has great potential, as I have described in the C3 sections on driving and graduation.
And yes, as I described in the local search section of the C3 Blueprint, I think that entries in a robust business directory can become the de facto web sites for many businesses that either don’t have web sites, have weak web sites or do not attract much traffic at their sites. By providing a wide range of services to business customers – video, email, text, search-engine optimization, direct transactions – the business directory becomes much more than an online yellow pages or a newspaper ad. The business can update any time and, with support from C3, turn the listing into a dynamic web presence. (iGuide is not there yet, but stay tuned.)
When I say we want C3 to become like Google for the local consumer, I understand that Google is still going to be the best search vehicle for many consumers seeking local or global answers. But by helping local businesses develop a robust web presence, we help potential customers find them on Google and other search engines.
Yes, the wide range of services that C3 envisions will not work for every company, especially some small ones. But some of the best innovations come from small companies that are more nimble than large corporations. The small company (and that includes my company) needs to choose the opportunities that are best for its market. And you need to be creative in seeking partnerships that can expand on your resources – collaborating with regional companies that you perhaps formerly saw as competitors, working through press associations, pooling resources within a large company or partnering with vendors.
Finally to your postscript: Yes, we should include text, email, RSS, Twitter, other social media and all forms of communication in our plans to serve our business customers. But think of ads as just one of many ways we will use those tools to serve them.
Again from Weybret: Assuming I haven’t overlooked any low-hanging fruit, which of these sources of income is contributing the most to your top line — which next fruit hangs lowest and tempts you most?
I don’t think we have any low-hanging fruit. We’re going to need to climb some trees. At Gazette Communications we’re in the process of deciding now which opportunities to pursue first. I have suggested the driving service described in the C3 blueprint as something to pursue first, not because it’s easy like low-hanging fruit, but for at least four factors that I think make it a fruitful opportunity nonetheless:
- Driving is a daily chore for most people, so this can do some important jobs that will be useful to our community.
- The automotive classified vertical has collapsed so severely, which is a huge problem for us, but also lessens the risk if we screw up this driving service but gives us the possibility of a greater reward if the driving service becomes an essential place where car dealers recognize they can connect with buyers.
- Every community has automotive service providers who tend not to be big newspaper advertisers, but who might see the value in connecting with people seeking and sharing information about driving.
- This service is ideal for mobile devices and C3 needs to move swiftly to become the local solution offering mobile services for consumers and businesses.
Another possibility we might pursue soon would be the babies service described in the C3 blueprint. Here are the reasons I see that as a good opportunity:
- We already publish an annual baby section, with photos and names of babies born in the community, with related advertising. So we’re already doing some of the work that would be involved in launching this.
- Most parents of babies are in the generations that are not strong newspaper readers, so I see great value in connecting with those families in a meaningful way that would start a relationship with C3 that we could expand to other services.
- I may be missing something here (possible; my sons are all grown, but we don’t have grandchildren yet), but I’m not aware of a competing national service that would be a factor in breaking into this area, the way Legacy would be a factor in the memorials service I propose or TheKnot and weddingwindow would for weddings or CaringBridge for illness. (I should add, though, that I don’t see the presence of those competitors as reasons to stay out of those fields. You might partner with one of those services in some way or find a way to use your local strength to give you an advantage in your market.)
- My friend, mentor and first boss in this business, Chuck Offenburger, loved this idea when he read the C3 blueprint and I really respect Offenburger’s judgment.
Weybret: Your theme of separating content and product seemed challenging at first but how much more complicated is it than this: Make sure every effort to gather information is made maximally useful by thoughtful and efficient reformatting, republishing, repurposing and archiving? Did I miss something? I don’t want to be catty, but the idea seemed no more “new school” to me than the just replating and zoning applied to Web readership communities. Yes, I know it will be hard. But my real fear is that scaled down to an audience my size it may prove unprofitably inefficient.
Separating content from product is way more than just the web version of replating and zoning. Replating and zoning are entirely product-focused. Think of your core job for the consumer as providing answers. To use an example from the driving service I envision, let’s say that I need new tires on my car. The content I need is answers about what are good tires and who in town has the best deals on the tires I want. I can get that information from a variety of products (some of them already existing): Ads in the newspaper, a business directory, user reviews in the business directory, stories in the archive about dealers and products. But let’s take this beyond products, especially if I need a tire immediately because mine just blew out. An example Chuck likes to use is that if I enter that search in the driving service on my cell phone, which has a GPS device, it might show me three nearby dealers, two of which offer towing services, and provide an e-coupon from one giving me a discount on a tire.
Can you see where this is way different from replating and zoning? This involved elegant organization of information content that’s not tied to a particular business as well as commercial content from our business partners. And if we are steering customers with immediate needs to business partners, that is a valuable service that I think has great potential to be profitably efficient (especially if we have the patience to work through the adjustments of the early stages when it might be unprofitable and inefficient as we grow enough businesses and users to make it work).
Weybret: I hope I don’t sound stuck in “old, industrial” thinking, but I worry that local content may have limited profit because it serves impractically limited audiences. Given the apparent low monetary value placed on our content (free news, free ads …), how do we assemble audiences of critically large mass and remain a source of “local” content. If that is not the problem, which products command high enough prices that they may be tailored to small, highly specialized audiences? If that is not the problem, what forms of automation/artificial intelligence exist to serve up highly specialized information with minimal human labor? And without some monopolistic protection, how do we keep that price from deteriorating faster than we can innovate?
Chuck may have a better answer here than I do. But my answer is that we need lots of experiments to find those answers. I can nearly guarantee you that some of the projects I describe in the C3 blueprint will be abject, humiliating, money-losing failures. But I think that some of them will be resounding successes that will help us change our culture and develop a foundation for a prosperous future. So we need the courage to risk the failures and persistence and patience to develop the successes. And we need to try enough different things that we can be confident some of them will be successful.
We need to find or develop the technology to help us provide these services. We need to use interactive databases, efficient tagging, effective searching and other tools that provide exactly the answers people are looking for, so we have a value to consumers that keeps them coming back and makes businesses want to use our services to connect with them.
As for the monopolistic protection, that might be where your small market would be an advantage. If you develop (or implement) a solution first in a market that can only support one, you might not face that competition that causes the price to deteriorate. Sometimes the price might deteriorate. Then you either drop that service, continue it as a loss leader to keep people coming to you for answers, or improve efficiency or volume, so you can make money at the lower price.
Weybret: Now I’m going to challenge you with one of my ideas. Would you agree that most Web sites are modeled on the primacy of search — the presumption that the reader knows what he/she is looking for — and that a human being mentally focused in this way is not a good candidate to receive an unexpected message as often happens in advertising. If you do, do you accept the idea that this “message of serendipity” delivered by many advertisements, is a significant value to advertisers? Now — have you examined the problem and do you have a few suggestions on how to improve the “browsability” of Web pages.
You’re right that the serendipity of adjacent advertising doesn’t work the same way online that it has for so long in newspapers. But consider the business directory: That’s a search tool. All the content there is exactly what the user is looking for, trying to answer questions and provide solutions. We need to think beyond the intrusive approach to advertising. For instance, if I am looking at the online engagement announcement of the daughter of a friend, one of the things I will be thinking is that we need to get a gift. So if the engagement announcement includes a link to a gift registry, that’s not an intrusion or a “message of serendipity.” It’s exactly what I need. And I’m going to click and get out my debit card and buy a gift. And if you host the gift registry, you’re going to keep a chunk of my purchase. Same with obituaries: I may be thinking that I need to send flowers or make a memorial contribution, so you should provide links for me to do that right now.
Weybret: Please excuse any tone of disrespect or hopelessness. Your columns and links have launched me on several weeks of thoughtful visualization. We are challenged but I remain hopeful that shared knowledge will lead to answers. Thank you for sharing your thoughts on our future and your consideration of my questions.
Disrespect? I can think of no greater statement of respect for the C3 blueprint than that it launched you on several weeks of thoughtful visualization. Thank you for your thoughtful questions. I hope my answers stimulate more thought. I look forward to sharing some solutions with you as we develop them. And I hope we will benefit from some solutions you develop for your consumers and businesses in Lodi.
Steve,
This could be mind-boggling in this information rich world we’re all a part of.
It’s all about local connectivity, we like the full color ads in the sunday papers, yet we want everything quickly. So, we go online on Saturday to see the next week advertisements. Your reference to the blown out tire stresses the point.
I just booked a trip back east, and from the Airtran website, I was able to link with everything, including a discounted car rental, hotel information, maps and half-priced, pre-paid airport parking. That’s a nice new feature.
Now to wrap those little comforts into a package that makes a person want to pull into a little local restaurant, check out Marion by moonlight or stop by a farmer’s market. A few clicks beforehand might lead to a new experience.
Our future is certainly going to demand new news. Yesterday’s tragic shooting in Parkersburg, is an unfortunate example. By mid-day, the story was replayed on national news, RSS feeds, breaking television stories and so on. Yet, around 5 PM, half of the patrons in the local joint were completely unaware.
The printed editions should continue to include more timeless and insightful stories of real people doing real things. A reflection of sorts, which today’s Gazette did a very fine job with.
If newspapers are the 20% of information that is conveyed, the other eighty percent is a huge cloud that has to be funneled and localized. All with a few simple clicks.
Challenges do abound.
Good Work.
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Very interesting. C3 sounds like one hell of a project. It seems to stick to the idea that the new business model for internet journalism is, in a sense, aggregation. C3 may not be aggregating news content, but it does seem to be aggregating advertising. This is an interesting spin on the old advertising business model which promisingly makes more active the previously passive role of something like the news paper. This allows the move from being an expense to being a business partner. There are some great interviews with top journalists about possible future directions for journalism at http://www.ourblook.com/component/option,com_sectionex/Itemid,200076/id,8/view,category/#catid69 which I have found useful on these topics.
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Thanks for the link and the comment, Bill. Actually, I think we need to do much more than aggregation (though that certainly is one of the solutions we will provide). We need to move beyond advertising, whether by aggregation or by our own ad sales, to offer a wider range of business services, including direct sales, lead generation and local search.
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